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Music Industry in China: Big Challenges, Bigger Potential

China is the most populous country in the world, and yet, its music industry revenue is dwarfed by much smaller nations’ at less than 1 percent of record companies’ global $15 billion. Why?

There are two major problems facing China’s music industry: state censorship, and large scale piracy. It’s estimated that music is pirated in China up to 99 percent of the time — an alarmingly high rate.

Even so, the industry has seen saw positive growth of 5.6 percent in 2014, likely due to the nation’s growing standard of living, tougher licensing, and the rising popularity of music streaming services.

Considering China’s 650 million-person online user base, the opportunity is massive for those working in the music business to jump in at the onset of growth, at a time where the model appears to be shifting for the better.

Big Chinese tech companies like Tencent, Alibaba, and China Mobile are now offering “freemium” streaming services abetted by Western record companies Universal, Sony Music, and Warner Music. The challenge is getting users to pay enough for substantial profit.

Some think this will happen relatively soon, especially as tech giants and record companies work together to consolidate services and shut down rogue piracy sites. A proposal for full performance rights in China is also underway, and could be enacted by 2016.

If that 99 percent piracy rate drops even slightly, the revenue will surely follow, to the benefit of musicians and the global industry alike.

 

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